Myopic Decisions of College Students: Major Choices and the Impacts of Merit Based Scholarships

Abstract

In the last two decades there has been massive expansion in state-level merit based scholarship (MBS) programs. At the same time the US has experienced an expanding gap between the number of Science, Engineering, Technology, and Mathematics (STEM) jobs and STEM graduates needed to fill them. In this dissertation I examine the effects of various state funded MBS programs and how they impact a student’s choice of college major, with a particular emphasis on how MBS programs impact STEM.

The first chapter of this dissertation uses the Beginning Postsecondary Student Longitudinal Study and regression discontinuity techniques to show that there is a causal link between merit based scholarship requirements and students leaving STEM majors. Merit based scholarships lead to an increase of roughly 35 percentage points in the probability of leaving STEM. I use these results to estimate the impact of MBS on the total number of STEM graduates and on long-term financial impacts for students.

The second chapter expands upon the results of the first. Continuing with the Beginning Postsecondary Student Longitudinal Study I focus on the impacts that MBS have on poorer students. Using instrumental variables techniques I am able to make use of much larger samples so that I can focus on students from different income groups and find that the negative impacts on STEM are concentrated almost exclusively among the lowest income tercile.

The third and final chapter focuses specifically on the Tennessee HOPE Scholarship. Again, I use a regression discontinuity approach to exploit arbitrary thresholds in initial eligibility and ongoing maintenance of the scholarship. Results suggest that for this particular sample students may initially shy away from STEM, but this does not extend toward lower rates of graduation in STEM. Results on major also suggest large increases in nursing and education majors at the expense of business majors.

I extend the current understanding of the impacts of state merit based scholarship programs by providing causal links between college major decisions and the grade and test score requirements built into the programs. Each essay provides insight into student behavior that is important for future policy decisions.